Breadcrumbs

EC-COI-89-6

February 8, 1989

FACTS:

Recently, the City Facility Committee (Committee) and ABC, anon-profit corporation, entered into a consultantship agreement,whereby ABC agreed to design, staff and execute a study of thefacilities of the City, and the Committee agreed to pay ABC aspecific fee. Pursuant to the consultantship agreement, ABCpresented the Committee with a comprehensive plan.

ABC and the Committee are currently negotiating a secondagreement which will implement the plan. Although the final termsof this agreement have not yet been determined, a draft contract(Contract) outlines the undertakings of the parties and representsthe basic structure by which both parties seek to revitalizefacilities of the Committee.

The terms of the contract can be summarized as follows: TheCommittee will delegate to ABC all of its authority andresponsibility for the management, supervision and oversight of thecity facilities. ABC will develop curriculum and instruction,including the training, supervision, and evaluation of allpersonnel. In addition, ABC will conduct hearings; set compensationfor employees, subject to all applicable laws and agreements; haveauthority to recruit, hire, appoint, evaluate, promote, assign,fire, suspend and dismiss employees and consultants; and conductcollective bargaining. The Committee will also delegate to ABC itspowers, functions and duties

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relating to city finances, including the authority to determineexpenditures within the total appropriation. Also, ABC will haveauthority to accept and expend gifts and grants, to preparebudgets, incur liabilities, and make expenditures for thefacilities. Furthermore, ABC will prepare the annual budget, applyfor and seek funds in the name of the Committee, and make contractsand agreements on behalf of the Committee. Except as provided forin the contract, no vote of the Committee shall be required inorder for ABC to exercise any powers delegated to it in thecontract.

ABC will provide appropriate resources to undertake the trainingof employees and will be solely responsible for determining whichABC personnel and resources will be utilized in the implementationof the contract. ABC will provide monthly reports to the Committeeand semi-annual reports to the governing body of the city. TheCommittee will be informed of funding goals, income projections,and budgetary changes.

The Committee retains the following powers in the contract,although it is understood that the final agreement may give theCommittee somewhat expanded powers to override certain ABCdecisions. The Committee will receive timely reports from ABC inthe implementation of the system. By majority vote, the Committeecan require ABC to reconsider (1) the adoption of policiesaffecting the facilities as a whole, (2) the adoption andsubmission of the annual budget, (3) the adoption of employeecollective bargaining agreements, and (4) new appointments of theadministrative officers. ABC shall then reconsider its decision andreport its decision after reconsideration, which will befinal, except if it involves a matter subject to override.

By two-thirds vote, the Committee will have the power tooverride acts of ABC regarding the adoption of policies affectingthe facilities as a whole; the adoption and submission of theannual budget; and the adoption of collective bargainingagreements. Thus, the Committee will be able to requirereconsideration of new appointments but shall not be empowered tooverride ABC decisions on such matters.

Currently, the contract states that the Committee will indemnifyand hold harmless ABC, its officers, trustees, employees and agentsfrom and against all losses, damages, liabilities, costs andexpenses. It is our understanding, however, that this clause issubject to change. The Contract as it now stands also providesthat ABC employees will not be subject to, among other statutes,the conflict of interest law, G.L. c. 268A.

The parties acknowledge that improvement of the facilities isone of the highest priorities of the city and commit themselves toa good faith effort to increase the available financial resources.If either party believes that insufficient funds will be availablein order to carry out the project, they will have the right toterminate the contract upon timely notice and the performance ofcertain conditions.

The contract will take effect upon its execution and uponadoption of local ordinances and revisions of the city charter.In addition, the General Court must enact enabling legislation.

No individual employed by ABC is specifically named in eitherthe contract or the draft legislation. ABC is empowered to performthe wide variety of functions contemplated in the contract. It isexpected that the entire program will be administered by an ad hoccommittee. No ABC personnel will assume roles within thefacilities. Each ABC employee who works on the project will receivecompensation from ABC. Facility employees will receive theircompensation from the city.

QUESTION:

On the basis of the foregoing facts, are ABC employees"municipal employees" or "special municipal employees" under G.L.c. 268A?

ANSWER:

No.

DISCUSSION:

We note at the outset that the arrangement envisioned by thecontract and accompanying legislation is unique in that itdelegates virtually all management powers of a municipal agency toa private entity. Because of that uniqueness, the consequentuncertainty as to how the contract will ultimately be performed,and the fact that contract provisions are still subject to change,we stress that this opinion is based solely upon the facts givento us m your recent letters and the contract.

"Municipal employee" is defined as "a person performing servicesfor a municipal agency, whether by election, appointment, contractof hire or engagement, whether serving with or without compensationon a...consultant basis..." G.L. c. 268A, s.1(g). Thus, it will notnecessary to be a paid, full-time, city worker in order to fallwithin the statutory definition of municipal employee." Evenuncompensated

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consultants to city government are "municipal employees" under theconflict law. For example, an architect or engineer who rendersprofessional services directly to a city or town agency would bea "municipal employee." Buss, The Massachusetts Conflict ofInterest Law An Analysis, 45 B.U. Law Rev. 299,3II (1965).

The Commission has long recognized that a consultant contractbetween a municipality and a corporation will not render thecorporation a "municipal employee." In most instances, employeesof such corporations will not come within the statutory definitionof "municipal employee." See EC-COI-87-8 (most corporate employeesare "too remote" from the municipality to be considered municipalemployees); EC-COI-83-129 (employees of corporate consultants notgenerally considered "municipal employees"). in the municipalityspecifically targets a certain individual within the corporatestructure to perform the services, however, that individual willbe. considered a government employee under G.L. c. 268A. See, EC-COI-86-21 (state agency specifically requested corporate employee),83-129 (state specifically contemplated corporate employee'sservices and had contractual right to approve replacement). Inpractical terms, specifically designated employees of a corporationare treated as if they are consultants to a governmental agency andtherefore covered by G.L c. 268A.

The contract in this instance mentions no ABC personnel;however, that fact will not always operate to exempt from"municipal employee" status individuals who are neverthelesstargeted by the municipality. See EC-COI-87-8 (individual notspecified in agreement found to be "municipal employee" as cityimpliedly contracted for his specific services). Therefore, wemust examine the following factors before determining whether acorporate employee not specifically designated in a municipalconsulting contract can be considered a "municipal employee":

1. Whether the individual's services are expressly or impliedlycontracted for;

2. The type and size of the corporation. For example, anindividual who is president, treasurer and sole stockholder of aclosely held corporation may be deemed a public employee if thecorporation has made a contract with a public agency;

3. The degree of specialized knowledge or expertise required ofthe service. For example, an individual who performs highlyspecialized services for a corporation which contracts with apublic agency to provide those services may be deemed to beperforming services directly to the agency;

4. The extent to which the individual personally performsservices under the contract, or controls and directs the terms ofthe contract or services provided thereunder and,

5. The extent to which the person has performed similar servicesfor the public entity in the past.

EC-COI-87-19; 87-8

Applying these criteria to the facts as outlined above, we concludethat ABC personnel working on the plan are not "municipalemployees"[1]

ABC employs many individuals and operates on a substantialbudget. Given the size of ABC and the variety of services whichwill be provided, there is little likelihood that ABC employees areattempting to hide behind corporate employee status in order to beexempt from the conflict law. Compare EC-COI-87. 8 (sole ownerand officer of corporation employing three individuals held to bestate employee as his services were impliedly contracted for by thestate agency). As this is the first time that the city hascontracted for the services contemplated in the agreement, thereis no history of actual services rendered upon which the Committeecan rely in order to target specific ABC personnel. AlthoughCommittee members have developed relationships with certain high-ranking ABC officials through the consultantship agreement, we donot find that the Committee has impliedly targeted the services ofthose particular individuals through the contract. The choice ofABC personnel is within the sole province of ABC; the Committee hasno right to override those choices or to demand the services of anyspecific ABC personnel. Thus, the Committee has not impliedlycontracted for the services of any ABC employee.

Although the facts here are unique, the Commission haspreviously decided one similar question which involved a publicentity's delegation of management authority to an outsidecorporation. We examined the five factors listed above in findingthat the facility manager was a governmental employee. EC-COI-87-19. However, that finding was grounded on the fact that themanager had a history of previous service in the same position withthe public entity, that he provided a high degree of specializedservice, and that the government had specifically contracted forhis services. Thus, we require the presence of a number of factorsbefore asserting jurisdiction. The sole factor present in thisinstance is the high degree of

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specialized services which will be performed by as yet undeterminedpersonnel. We do not find that this fact alone will render thoseindividuals "municipal employees."

With this opinion, we do not comment on the wisdom of the planor its constitutional permissibility. We answer only your immediatequestion, and use our standard of the need for either an expressor implied governmental request for services. Applying thatstandard to the facts in this case, we find that the Committee hasnot and cannot designate specific ABC employees for work on theplan. Rather, the Committee has delegated authority to ABC as acorporate entity. Therefore, we conclude that ABC personnel willnot be considered municipal or special municipal employees underthe conflict law. As stated, this opinion is based on the factscontained in the contract and your earlier letters. Should theperformance of the contract lead to results materially differentfrom those contemplated therein, we advise that you renew yourrequest for an opinion based on those facts.[3]

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[1] By extension, they cannot be considered "special municipalemployees," as that term necessarily encompasses only "municipalemployees." G.L. c. 268A, s.1(n).

[2] For example, if it has been the expectation of the parties thatthe plan will be administered by specific individuals, we wouldneed to reconsider our result with respect to those individuals.In such or similar event, we will consider the present opinion aspreliminary.